In order to dissect the complex processes of reception-mediated endocytosis and compartmentalization of acid hydrolases into lysosomes we have isolated mutant CHO cells defective in these funtions: I) Endocytosis mutants were obtained by first selecting for cells resistant to diptheria toxin then screening the resistant cells for those unable to take up acid hydrolases. The phenotype of one of these mutants closely resembled that of normal cells following treatment with lysosomotropic amines; however, lysosomal acidification and transglutaminase activity, two targets of inhibition by the amines, appeared normal in this mutant II). Mutants simultaneously defective in Alpha-L-iduronidase and Beta-glucuronidase were isolated in order to examine biosynthesis of the oligosaccharides on acid hydrolases; it is the phosphorylation of these oligosaccharides that distinguishes acid hydrolases from other glycoproteins. One of these mutants exhibited varying levels of oligosaccharide transfer, dependent upon the nature of the protein acceptor; i.e., differential glycosylation of the two polypeptides of Beta-hexosaminidase, and of the glycoproteins of two lytic viruses, Sindbis and vesicular stomatitis virus.